June 10, 2020
Coronavirus (Covid - 19)

By Lucy Rana and Vibhuti Vasisth

International framework to combat Covid- 19

Since our previous update dated April 23, 2020, on various government schemes launched globally so as to tackle the economic disturbances which have resulted from the COVID-19 pandemic, we have endeavoured to prepare a list1 of all the significant coronavirus related regulatory updates, to keep you up to date. The same have been enumerated herein:


The European Union (“EU”) Council has adopted2 “SURE”, a temporary scheme to provide up to EUR 100 billion of loans to its Member States. The instrument is such that would enable the EU Member States to request for financial support tackling sudden and severe financial increases of national public expenditure relating to the crisis response measures. EU leaders endorsed the said agreement on April 23, 2020, and called for the package to be operational by June 01, 2020.

With an aim to provide its Member States with financial assistance at/on favourable terms, the EU Commission would be raising funds on international capital markets. The SURE loans would be backed by the EU budget and its guarantees are provided by the Member States. The total amount of guarantees would be EUR 25 billion (approximately). SURE would be made available after guarantees from all the member states have been provided.  The instrument would then be operational till December 31, 2022. Further, upon expiry of the said period if economic disturbances still persist, upon a proposal from the Commission, the Council may decide to extend the period of availability of the SURE-instrument, each time for a period of 6-months.

The Council has also adopted a decision3 so as to provide nearly EUR 3 billion of macro-financial assistance to a total of ten enlargement and neighbourhood countries in order to help them cope with the economic fallout of the present unprecedented pandemic. Financial assistances would be provided in the form of loans and is primarily aimed to help cover immediate financing needs which have increased as a resultant of the outbreak. Further, the Commission has sanctioned:

  1. an EUR 18.5 billion Czech guarantee scheme4 for those companies that are affected by the outbreak;
  2. a Danish guarantee scheme5 which would aid in stabilising the trade credit insurance market; and
  3. an EUR 9 billion Italian “umbrella” scheme6 which would support the Italian economy affected by the outbreak.

The schemes have been approved and adopted under the State aid Temporary Framework7, and the same was adopted by the Commission on March 19, 2020, and stood amended on April 03, 20208, and May 08, 20209.

The European Securities and Markets Authority (“ESMA”) has also recognised10 the non-renewal of emergency restrictions on short selling and other similarly positioned transactions by certain national competent authorities (“NCAs”) that are listed herein:

  • Finanzmarktaufsicht (“FMA”), Austria;
  • Financial Securities and Markets Authority (“FSMA”), Belgium;
  • Autorité des Marchés Financiers (“AMF”), France;
  • Hellenic Capital Market Commission (“HCMC”), Greece; and
  • Comisión Nacional del Mercado de Valores (“CNMV”), Spain.


The Governor of the Banque de France has published a Decision, being Decision No. 2020-0311 amending the previous Decision being Decision No. 2020-02 of April 20, 2020, on additional temporary measures relating to the Banque de France refinancing operations and eligibility for collateral. The decision implements the European Central Bank (“ECB”) Guideline (EU) 2020/63412 of 7 May 2020 into French law. The intended purpose of the said guidelines is to enable mitigation of the adverse impact on the Eurosystem collateral availability of potential rating downgrades resulting from the economic fallout attributed to the outbreak. Amongst other things, the Banque de France decision also amends Article 8ter which relates to the admission of certain marketable assets and issuers eligible as on April 07, 2020. The temporary measures contained in the decision would be applicable as long as Guidelines ECB/2020/21 and ECB/2020/29 would remain in force.


The Italian Government has issued a “Relaunch Decree”/Decreto Rilancio (being no. 34 of May 19, 2020) which was published13 in the Italian Official Gazette. Together with the “Cure Italy Decree”/Decreto Cura Italia and the “Liquidity Decree”/Decreto Liquidità, the decree is intended to grapple the COVID-19 emergencies.

The Italian Government has assumed14 a unitary and an organic decree for Phase two of the Economy, which allocates the following:

  1. EUR 155 billion in terms of net balance required to be financed, and EUR 55 billion in terms of borrowing; and
  2. interventions to support businesses, such as – allocating approximately EUR 4 billion for the cancellation of the June – Regional Tax on Productive Activities/Imposta Regionale sulle Attività Produttive, balance and advance payment for companies with a turnover of about EUR 250 million.


Her Majesty’s (“HM”) Treasury has issued15 an extension to the Coronavirus Large Business Interruption Loan Scheme (“CLBILS”), including that the maximum loan size that would be available under the scheme would increase from the existing GBP 50 million to GBP 200 million (up to 25% of turnover), so that certain larger firms that do not qualify for the Bank of England’s COVID Corporate Financing Facility (“CCFF”) would also be able to access enough finances to meet their cash-flow requirements during these pressing times.

The HM Treasury has also published details of an update16 enumerating the terms of the CCFF.

Furthermore, the Corporate Insolvency and Governance Bill17 has been published. The said Bill is intended to help the companies and other similar entities by easing their burden on businesses and helping them to avoid insolvency during the present economic uncertainties caused by the pandemic. The Bill has three main sets of measures which would enable it to achieve its purpose:

  1. to introduce greater flexibility into the insolvency regime, while allowing companies breathing space to explore options for rescue whilst protecting the supplies, so they can have the maximum and optimum chances of survival;
  2. to temporarily suspend parts of insolvency law in order to offer support to directors to continue trading through the emergency without being influenced by the threat of personal liability and enabling them to protect companies from aggressive creditor actions; and
  3. to provide companies and other similar bodies with certain temporary easements on company filing requirements and other requirements that relate to meetings such as annual general meetings (“AGMs”).


The Swiss Financial Market Supervisory Authority (“FINMA”) has published certain additional guidelines18 in the context of the COVID-19 crisis, aimed at containing adjustments to the periods for various exemptions which have been already granted and further, specifying in more detail how the net stable funding ratio (“NSFR”) is calculated.


The Luxembourg Central Bank (“BCL”) has approved and adopted19 Regulation (2020 / No. 28 of May 18, 2020) which would amend BCL Regulation no. 2014 / No 18 of August 21, 2014, and implement the European Central Bank (“ECB”) Guideline of July 09, 2014 on additional temporary measures in respect of the Eurosystem refinancing operations and eligibility of collateral (ECB/2014/31), so as to reflect the amendments made to the latter by the ECB Guidelines of May 07, 2020 being ECB/2020/29. These additional and new measures are intended to mitigate the adverse impact on Eurosystem collateral availability of potential rating downgrades resulting from the economic fallout resultant of the outbreak. The new BCL Regulation enumerates new provisions relating to admission of certain marketable assets and issuers, eligible as on April 07, 2020, and further specifies valuation haircut levels applied to the various types of eligible marketable assets.

In the meanwhile, a bill of law on foreign investments in Luxembourg has been filed20 by a Member of the Luxemburg Parliament. The bill as filed, is intended to introduce a foreign investment screening mechanism in Luxembourg, which would, address the consequences of the present pandemic. The bill stresses that, despite the substantial State aid measures that have been taken, the health crisis are bound to leave many companies in a difficult position, creating vulnerability among investors with objectives exceeding pure economic intentions. The said proposal thus seeks to create a procedure that would help in assessing, examining, authorising, or cancelling foreign investments or making them subject to certain conditions, etc. However, the Government has not yet indicated or given out comments in relation to the bill of law.


The Dutch Central Bank (“DNB”) has published certain information21 on the notification requirements for the general moratoria. Further, the European Banking Authority (“EBA”) guidelines on legislative as well as non-legislative moratoria on loan re-payments22 clarify the requirements for the recognition of private moratoria as a general moratoria. Now, DNB needs to be notified when recognition of moratorium as a general moratorium is sought by a Dutch credit institution. This applies both, i) to less significant institutions that are directly supervised by the DNB, as well as, ii) the significant institutions that are supervised by the ECB. Credit institutions have also been requested to use the notification template and to return fully completed templates to DNB. Further, considering the limited application period of the EBA guidelines, the DNB has called for the credit institutions to send-in their notifications as the earliest. Credit institutions that have already publicly communicated their moratorium have been asked to send-in their notifications, no later than May 29, 2020. Credit institutions that are now preparing for new moratoria are requested to send-in their notifications within five working days from the date of public announcement of a moratorium. The Dutch Government has also announced23 a new type of corona bridging loan (“COL”) for start-ups, scale-ups and innovative SMEs that need financing as a result of the global crisis. The said measure is intended and aimed at businesses that are dependent on investors. SMEs that have financed their growth with their own resources would also be eligible to apply for a COL subject to certain terms and conditions.


In the month of March 2020, the Spanish Government approved and sanctioned a guarantee scheme of about EUR 100 billion which would support employment and mitigate the economic effects of the pandemic (through Royal Decree-Law 8/2020, of March 17, 2020). The said guarantee scheme was intended to cover the financing/finances granted by financial institutions so as to provide access to credit and liquidity to companies and various self-employed individuals in order to address the economic and social impact of COVID-19 outbreak. These financings have been partially guaranteed by the Spanish Government through the Official Credit Institute / Instituto de Crédito Oficial. Furthermore, to the approval of the first, second and third tranches of the said guarantee scheme, the Spanish Council of Ministers / Consejo de Ministros, has now agreed to launch a fourth tranche24, of about EUR 20 billion, which would benefit the self-employed individuals and the SMEs. As result of this fourth tranche, the aggregate amount of the guarantee rises to EUR 84.5 billion of the EUR 100 billion available, out of which EUR 60 billion have been reserved for the self-employed and SMEs. Eligible beneficiaries may apply for a guarantee on or before September 30, 2020, unless the said date is extended by the Government based on the EU State aid Temporary Framework (please refer to the preceding paragraphs).


The Bank of Japan has introduced25 a new fund-provisioning measure which would offer further support to the financing of mainly small and medium-sized firms. Under this new measure, the Bank of Japan would be providing funds to eligible counterparties against pooled collateral for a period of one year at the loan rate of 0% with the maximum amounts outstanding of eligible loans reported by those counterparties (which equals to about JPY 30 trillion).

The Bank of Japan has already implemented the following measures so as to offer its support:

  • purchases of commercial paper and corporate bonds (equivalent to up to JPY 20 trillion); and
  • the special funds-supplying operations in order to facilitate financing in response to the COVID-19 pandemic (equals about JPY 25 trillion).

The Bank of Japan has also indicated that it would be referring to the above-noted measures as the special program to support financing in response to the COVID-19 pandemic (total size of about JPY 75 trillion). Additionally, with an aim to maintain stability in financial markets, the Bank has also been providing Yen and foreign currency funds without setting upper limits/ capping the limits, mainly through the purchases of Japanese government bonds, conducting US dollar funds-supplying operations, and by actively purchasing exchange-traded funds and Japanese real estate investment trusts.


The federal bank regulatory agencies have released26 temporary changes to their existing supplementary leverage ratio rule. The new interim final rule would permit a depository institution to opt whether to exclude the US Treasury securities and deposits at Federal Reserve Banks from the calculation of its supplementary leverage ratio. Where a depository institution does change its existing supplementary leverage ratio calculation, it would be required to request such prior approval from its primary federal banking regulator before making capital distributions, for instance, paying dividends to its parent company, as long as the exclusion is in effect. The agencies would be providing this temporary exclusion in order to enable depository institutions to expand their balance sheets as appropriate to serve the financial intermediaries and their customers. The supplementary leverage ratio, would generally, include subsidiaries of bank holding companies with more than USD 250 billion of consolidated assets in total. The rule requires to hold a minimum ratio of three percent as measured against their total leverage exposure, coupled with more stringent requirements for the largest and the most systemic financial institutions. The change would be effective once the rule has been published in the Federal Register and would be in effect till March 31, 2021. Comments would be accepted for a period of forty-five days from the date of publication in the Federal Register.

The Federal Reserve Bank of New York has also announced27 the first loan subscription date for the Term Asset-Backed Securities Loan Facility (“TALF”) and released an expanded set of frequently asked questions28 (“FAQs”) and other documents that pertain to the facility’s operations. The TALF’s first subscription date for loans backed by eligible asset-backed securities (“ABS”) would be June 17, 2020 and the first loan closing date would be June 25, 2020. Under the TALF, the Federal Reserve Bank of New York (“New York Fed”) would be lending to a special purpose vehicle (“TALF SPV”), which would then provide a non-recourse funding secured by eligible collateral to eligible borrowers. On certain fixed days of each month, borrowers would be eligible to request one or more, three-year TALF loans. The New York Fed has also published a Master Loan and Security Agreement29 (“MLSA”), which further enumerates the details on the terms that would be applicable to TALF loans.

A Customer Advisory30 has been issued by the Commodity Futures Trading Commission (“CFTC”) to inform the public about the risks associated with certain trading vehicles that utilise futures-contracts or other commodity interests while they make investment decisions during the present pandemic. This is the third Customer Advisory that the CFTC has issued in response to the outbreak and is a joint product and collaboration of the Office of Customer Education and Outreach (“OCEO”) and the Division of Swap Dealer and Intermediary Oversight (“DSIO”).


The Monetary Authority of Singapore (“MAS”) has announced31 that financial institutions in Singapore would be allowed to reopen more customer service locations starting from June 02, 2020. However, the MAS has also indicated that its decision to reopen more customer service locations would be carried out with strict and safe management requirements in place to minimise the risk of the spread of COVID-19 infections, which also need to be in line with the Ministry of Health’s three-phased approach to resume businesses.

The announcement emphasised on:

  • financial institutions would be able to have more onsite staff in order to meet increased customer needs as also serve customers using both, online as well as offline channels more efficiently. However, the financial institutions would have to implement strict safe management measures, which ought to include staggered start times and flexible work hours, so as to ensure that safe distancing, at all times, can be maintained at work premises;
  • customer service locations of insurance companies, fund managers, and brokers would also be allowed to re-open and process essential customer transactions, such as facilitating account opening, updating account information and processing claims and applications for relief measures, and so forth. Money changing services would also be allowed to resume; and
  • financial institutions which provide and assist financial advice on banking, insurance and investment products, would be allowed to have in-person meetings with their customers within their business premises only with a prior MAS approval and provided that the additional safe management measures are adhered to.

The MAS has strongly advised all financial institutions and its customers to continue using digital financial services and electronic payments as much as practical. It has also emphasised and indicated that it would continue to:

  • conduct onsite inspections to check whether safe management requirements are implemented; and
  • work closely with the financial industry so as to safeguard the safety of the customers and the working staff while progressively expanding the range of financial services that are being offered and while also maintaining Singapore’s position as a renowned international financial centre.

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